There are several elements consumers should consider when shopping for home electricity plans. The most common decisions involve selecting the type of pricing plan (fixed rate or variable rate), length of contract term, and renewable energy content. For some customers, their search begins and ends with the electricity rate. Many consumers, however, also want to consider the quality of customer service in their decision- making process.
Consumers seeking to compare electricity providers based on their service have to do a little more work than those shopping based only on rates. The difficulty lies in the nature of residential electric service as well as our own tendency to share our experiences.
To assist consumers with electricity shopping, some state regulatory agencies provide complaint scorecards. The scorecard for Texas electricity providers is a rolling six-month average of complaints. The ratings are normalized by the number of customers served by the electricity company. Complaints regarding Connecticut electricity suppliers, however, are simply reported by the number of complaints received in various service categories (e.g., billing, metering, and slamming). The problem with complaint scorecards is two-fold.
First, these scorecards track the number of complaints without considering if the complaint had any merit or if how it was resolved. While the Texas scorecard has a disclaimer to this effect, most consumers focus more on the electric provider ratings than the fine print at the bottom of the page. In the case of the Connecticut scorecard, electric supplier complaints are displayed without any regard for the number of customers served by the supplier. In other words, a small provider with 10 complaints may appear favorable when compared to a much larger provider with 20 complaints.
Second, complaint scorecards reflect our tendency to register negative experiences to a greater degree than positive experiences. For example, consider a customer who shops for a lower electricity rate and then switches to a new residential energy provider. The electricity provider accurately bills the customer, communicates with customer in a timely and meaningful manner, and delivers effective and courteous customer service. The customer is highly unlikely to contact the state utility commission to report their experience. Furthermore, even if they did attempt to report their positive experience, the utility commission does not track and publish these instances. They are only set up to track and report negative experiences.
The very nature of a complaint scorecard is that it shows one aspect of electricity provider performance. The scorecards do not judge the merit of complaints and their reporting format may cause consumers to reach an inaccurate conclusion as to a supplier’s quality of service.
Better Business Bureau
Similar to utility commission complaint scorecards, Better Business Bureau (BBB) grades largely result from negative customer service experiences. The BBB, however, is more concerned on how the electricity supplier responds to and resolves complaints. This gives BBB scores an advantage over complaint scorecards in that the merit of the complaint comes into play.
A customer that has not paid their bill for a couple of months can register a complaint with the utility commission that will be counted against the electricity provider. That same customer may not get much traction with the BBB if the electricity provider responds to the complaint in a timely manner and provides documentation that it has attempted to make payment arrangements with the customer.
The challenge with using the BBB to compare electricity providers is that most consumers instinctively complain to the utility commission rather than contact the BBB. This could be rooted in the belief that the utility commission will be more sympathetic or the knowledge that the commission licenses and regulates the electricity suppliers. Until more consumers view the BBB as a viable means of reporting issues, the BBB scores will be reflective of a small number of reported issues.
J.D. Power Residential Customer Satisfaction Study
The most comprehensive survey of consumer experiences with electricity providers is the J.D. Power Residential Customer Satisfaction Study. This annual survey is the gold standard in sorting out which providers consistently deliver great service. The survey solicits consumer feedback in each state with electric customer choice. Rather than focusing solely on negative experiences like complaint scorecards, the J.D Power survey asks consumers to rate their electricity provider in a number of key areas.
The survey is published on an annual basis so the results may be somewhat stale depending on when a consumer is shopping for electricity. In addition, the survey may have limited applicability in states where electricity choice programs have low awareness or rely on utility billing.
For example, Texas electricity providers provide all aspects of customer service including switching, billing, collections, and general customer service. In some states, the utility handles these functions and includes the electricity provider charges as a line item on the billing statement. Consumer awareness of the electricity supplier may be very low in those states as there is an indirect relationship between the customer and the company. This can impair the usefulness of the survey; however, it remains the best source of electricity provider ratings.
Friends and Family
In addition to the resources described above, consumers may consider consulting with friends, family, neighbors, and other people in their personal network. While this is not a scientific approach, sometimes it yields the most useful information. The only drawback to this approach is that consumers may stumble upon an acquaintance that is marketing for a particular electricity supplier.
Some electricity providers use network marketing to grow their customer base. Others offer incentives to existing customers who refer friends and family. This does not necessarily mean their opinion of the electricity provider is invalid, it just means you should carefully consider any recommendation that is accompanied by a referral code.
If the resources described above leave consumers overwhelmed or confused about how to include customer service in the electricity buying decision, the best advice is to contract for a short term to get first-hand experience with the provider. A six-month term will tell a lot about how an electricity provider performs. If the consumer is satisfied with the level of service, they can renew for a longer term. The good news is that most electricity companies deliver competent service and many consistently deliver outstanding service. Consumers should feel comfortable making a decision primarily on price while still giving some weight to supplier reputation.